Job cuts, separation of businesses, capital increase: Credit Suisse wants to overcome one of its most serious crises with a massive restructuring.
The ailing major Swiss bank Credit Suisse wants to get out of the crisis with a capital increase, large-scale layoffs and a radical restructuring of investment banking. For this purpose, investment banking in particular will be reduced and a significant part of the securitized products sector will be sold to US financial investor Apollo and Allianz subsidiary Pimco, as the major Swiss bank announced on Thursday.
In addition, she is planning a capital increase of four billion Swiss francs, some of which will be subscribed to by professional investors such as the Saudi National Bank. As part of the restructuring, the traditional Zurich group is cutting 2,700 jobs at short notice. Depreciation in connection with the restructuring of the group brought Credit Suisse a loss of four billion francs in the third quarter.
“This is a historic moment,” said CEO Ulrich Körner, who only took over the helm at the end of July. After a series of failures, such as the collapse of major customer Archegos, the 166-year-old bank had practically completely replaced the top management. The realignment that has now been announced by the former McKinsey consultant and restructuring expert is the third course correction since 2015.
Credit Suisse is thus moving closer to the model of its rival UBS, which cut investment banking around ten years ago and focused on wealth management. Investment bank boss Christian Meissner resigns with immediate effect.
The bank plans to cut 17 percent of its 52,000 jobs
In addition, the capital markets and consulting business are to be spun off into the new CS First Boston unit over the next three years. “The future CS First Boston aims to raise outside capital and a preferred long-term partnership with the new Credit Suisse,” the bank said. The bank also wants to cut 17 percent of its 52,000 jobs. By the end of 2025 there should only be 43,000 employees. By the end of 2025, the costs are expected to fall by around 15 percent to CHF 14.5 billion. The bank had already confirmed the planned sale of the traditional Hotel Savoy in Zurich. The building was valued at up to half a billion francs.
The bank has been battered since the debacles surrounding the billion-dollar Archegos hedge fund collapse and Greensill fund liquidation last year. A series of scandals and court cases has eroded trust in the bank. The market value of the bank has fallen since 2017 from CHF 45 billion at the time to below CHF 10 billion at times in October. At the beginning of October, the share price was at an all-time low of less than four francs before recovering slightly.